Michael Kass, manager of the Baron Emerging Markets Fund (BEXFX), explains why the emerging markets rally may have a long way to go. As for Alibaba, he sees many ways the company can keep expanding.

This transcript has been automatically generated and may not be 100% accurate.

I ... I was like a Pattie a senior editor at the hearing today and here with Michael passed in the beer in emerging markets by ... I know it's been an exciting year in raising my gets a voice in the last year the same ... breath and thirty percent off the bottom in late January ... I'm so what what happens now United youth team sustainable ... ah well we certainly think that we seen so far this year is really a reversal of a lot of the pressures that we saw from last years so what's happened is ... around walking into the specifics that the Tory Marsh was a really important to inflection point and it's all of those up factors that were weighing on emerging market prices in markets ... reversal currencies are recovering ... credit spreads are declining credit quality is improving ... in commodity prices are rising so that's really created tailwinds for a lot of common what's happened so far is that ... its emerging market equities every price for the higher risk environment and ammo what we see coming next which is really not priced in yen is a cyclical earnings recovery and ... we think that's really what were looking for a do over the next U S is intensely my game fare sale and if you're looking around what what are some of them I consider attractive right now I'm sure well I mean mostly you can look it didn't get to the inverse of what was going for the lecture so in these places where the forces ever first ... year we've been looking for ideas and I'd say going back into some of our favorite companies ... were increasing positions in summer favorite stocks ... in the countries that were hit hard like Brazil the rest of Latin America and if you count dipped are telling to rush it's not a place we typically find a lot of opportunity there are a few companies we like they're in ... South Africa and so these are some other places we've we've increased our sales so um ... know some places the we've always ... long-term had long-term you know ... you know ... commitment to ... the China Internet stocks as it is a great space between increased ... really more weight when the market heads and ingestion back in the early spring when we were able to increase exposure ... and last India is is really um interesting are some very significant ... fundamental reforms everywhere I think there's a ... hell of a ... new commitment isn't this a new leg two to what's happening there so we were ... we've increased exposure to more cyclical companies there is reason for it the very beginning phase of the investment cycle and is settling at a rate hike it seems like or if investors says the couple takes at China or elsewhere oh sure okay ... well China I mean we talk to the China Internet Alibaba sort of like us and we will win a topical name that that is well known out there what are the largest market cap companies in the world ... are we really like it we think it's got him a long runway of growth in the core business and on like an Amazon say which many people would compare it to ... really doesn't have you know I would say you look at the established ... bricks and mortar retail competition across China said when the smaller tears says really doesn't exist and so alley Baba has become an open playing field in the really it's a ... creating ... opportunities for commerce for their merchant partner's they ... never have existed so anyway say some the thanks I know that there is a lot of speculation ... I am ... and ... I'm you know I think we try to ... you know ... we try to separate the long-term into force from the trees we certainly ... you know can appreciate some of those points in the same to us to be more short-term oriented ... and other company in was with support us what's happened last year with a stock really reaccelerate to the upside ... was about sch demonstrating that their monetization rate is improving with that means is ... that they're taking a they're getting a larger share of the revenues that flow through their due to their partner urchin a known for their platform ... so that's a sign of pricing power is a sign that they are delivering more value to their customers ... and the cafe more we think that that you know ... these their returns are in a rising earnings growth can accelerate ... winning the sustainable the group we think the core business will grow thirty percent for the next several years but then they're all these other ... small toward smaller businesses ... the cloud computing opportunity in this is a huge part of the Amazon story it's it's it's seven years behind in just getting going in China ... on their payments platform and their raw and financial will be you know with the ... during a to do an IPO in the next year or so and that's can really surprise people with a value that's going to be so I potential of the writers lots of potential and try to focus on the long-term value and they assume I had after that risk CEO asserted that what could derail this picture that you can see here for an IPO right now we do we do still can often and then a minimum the cyclical earnings recovery we have good visibility on and so while ... we're not certain with global markets again to do with the Fed perhaps moving towards another rate hike ... we can't be in a certain of that but we think that emerging market equities are well positioned to likely outperform regardless of what happens in the near future ... we think that you know the bigger risk would be if you know ... if the Fed does go through a a ... more significant rate hike cycle than currently anticipated ... I'd say one of the dresses were starting to see signs of inflation perking up around the world you can really the transition from ... for the last few years we've heard a lot of quantitative easing the primary ... form of of of of ... of of monetary stimulus around the world has been developed world ... quantitative easing or ... we're moving ... towards that sort of running a gas in terms of ... the ... efficacy of what we can expect ... so ... a lot ... policy makers are shifting towards fiscal stimulus combined with monetary stimulus which we think ... really does begin to change the outlook for interest rates around the world ... we may see rising interest rates can we have to say that it may keep an eye and that ... is we will go ... on all of ... you